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Wednesday, November 28, 2007

Equities took a U-turn on Wednesday and ended lower on account of profit booking. From a gap-up opening of 190 points, the Sensex closed down 219 points or 1.1 per cent at provisional 18,908.98. The Nifty ended at provisional 5602, down 96 points or 1.68 per cent.

Among sectors, BSE Oil & Gas and Metals indices were down 2.29 per cent and 2.12 per cent, respectively. BSE Auto Index bucked the trend to close 1.05 per cent higher.

Second rung stocks lost steam as the BSE Midcap and Smallcap indices closed flat for second straight day. BSE Midcap Index closed down 0.07 per cent at 8,393 and BSE Small cap Index closed up 0.13 per cent at 10,385.

eClerx Services is eyeing a mop-up of Rs 101 crore from its initial public offering which opens on December 4. The company has priced its Rs 10 share at Rs 270-315 per share in the 100 per cent book building offering. The issue closes on December 7.

eClerx Services proposes to utilise the net proceeds to fund acquisitions, infrastructure investments and for setting up additional facilities.

Markets had a cautious play ahead of the FnO expiry tomorrow where rollover is expected to be smooth. After a decent gap up start market traded ranged till the mid session due to lack of momentum and then slowly lost its grounds on profit booking. Metals, Oil and gas and Power were among major sectors to witness selling pressure, while Auto gained some strength. Buying momentum was high in newly added strips list under FnO trade which kept midcap space in action and outperformed the front liners. Media stocks were also in limelight like PVR, Adlabs and Cinemax. At the final hour of trade market slipped significantly to close in Deep red. The weakness in market was in line with the trend in Asian and European markets.

F&O turnover for the day was strong on one day ahead of expiry and rollover has been seen good in Banking space followed by the Pharma sector. Overall the rollover is smooth with 50% positions compared with the last month.

Mold Tek Technologies closed higher by 13%. Mold-Tek Technologies Limited (Mold Tek) one of the leaders in packaging and an emerging player in the Structural Engineering KPO Services segment posted good numbers for the 2nd Quarter ending September 30th, 2007. Mold Tek managed a growth of 12 % yoy with total turnover of Rs. 28 cr as against Rs. 25 cr during last year. There could be some triggers from a probable acquisition on cards which today stock spurted up in the market today. The company rides on high value billing with a polished front end and a low cost backend. This gives good support for the company to lead in the space. We have detailed research note. Do have alook on this for more details. We remain positive on this business.

Solar Explosive showed good strength and kept its momentum. Solar explosive provides explosive solutions for mining activities including slurry Explosives. The company undertakes manufacturing of Detonators and Detonator components through its subsidiary. The business is good with strong barriers to entry and Solar has the edge with its high market share and explosive experts. This as an investment with a long term perspective is a good idea. The mining policy coming up in the later half of the year would eventually help unlocking the big potential of this business. Do read our research note for more details. We had Wow call on this one which delivered good returns in short term.

Technically Speaking: Sensex opened in green but slowly slipped and ended weak in red. It made intraday high of 19,317 and days low of 18,884. Volume was good at Rs 7,435Crs. The breath was in favor of Declines, where Advances stood at 1282 and Declines at 1490. Sensex has closed the day at weak, as we were expecting a weak expiry. Traders are advised to take long if markets fall further tomorrow. Supports are seen at 18715 and 18500. Resistance is expected at 19360.

The market failed to hold on to its early gains on profit bookings in most of the frontline stocks and the Sensex entered into negative territory by afternoon. Shrugging off the weak Asian markets, the Sensex took a cue from US markets and opened with a positive gap of 189 points. However, sustained selling thereafter pulled the market down with the index plunging deep into the red to touch an intra-day low of 18,884, down 244 points from the last close. The Sensex gyrated over 433 points during the intra-day trades. The Sensex managed to recover some losses towards the close, but ended the session 189 points down at 18,939, while the Nifty declined by 81 points to close at 5,618.

Among the major losers, Hindalco shed 3.66% at Rs184, Tata Steel declined 3.41% at Rs819, ACC fell 3.30% at Rs1,075 and Reliance Energy slipped 2.93% at Rs1,704. TCS dipped 2.11% at Rs976, DLF lost 2.05% at Rs880 and Reliance Industries slumped 1.96% at Rs2,786. Maruti Suzuki, however, gained 3.11% at Rs967, followed by Bajaj Auto up 2.82% at Rs2,728, BHEL added 1.93% at Rs2,725 and Ambuja Cement jumped 1.04% at Rs151. Tata Motors, ITC and HDFC ended the day in the positive territory.

In a completed reversal of the trend, the market lost ground in the latter part of the trading in contract to an initial surge. Oil & gas and metal stocks were worst hit. Index heavyweight Reliance Industries (RIL) lost ground. Auto stocks were in demand. The market breadth turned negative from positive in late trade. 23 out of 30 stocks from the Sensex pack were in red.

Asian stocks started the day stronger, tracking gains in US markets, but worries about the credit market soon returned, pushing most of the markets in the red. European markets, which opened after Indian markets, were mixed.

The market has been volatile over the past few days due to alternate bouts of buying and selling amid FII sales caused by redemption pressure in their home countries and fears of a US recession arising from US housing slump and credit crisis.

Prime Minister Manmohan Singh today, 28 November 2007, declared in Parliament that the Indo-US nuclear deal does not bar India from carrying out nuclear tests in future. "If a necessity for carrying out a nuclear test arises in future, there is nothing in the agreement that prevents us from carrying out tests," he said in a brief intervention in Lok Sabha. A discussion is going on today in Parliament on the nuclear deal.

The 30-share BSE Sensex ended down 188.86 points or 0.99% to 18,938.87. The Sensex hit a low of 18,884.20 at the fag end of the trading session. At day's low, the Sensex shed 243.53 points. The Sensex had hit a high of 19,316.76 in early trade. At day's high, the Sensex gained 189.03 points.

The broader based S&P CNX Nifty was down 80.60 points or 1.41% to 5617.55. Nifty had hit a high of 5749.95 earlier during the day. At day's high, Nifty had risen 51.80 points.

The BSE Mid-Cap index ended down 0.12% to 8,383.49. The BSE Small-Cap index ended up 0.03% to 10,375.30. Both these indices outperformed the Sensex.

GAIL India, which distributes natural gas and processes petrochemicals, declined 0.65% to Rs 424.85, off sessions high of Rs 445.90. As per reports, the company has won the rights to market the gas jointly produced by Reliance Industries, British Gas and ONGC from the Panna-Mukta-Tapti fields, which will boost revenues of the company by over Rs 5,00 crore.

Realty major DLF fell 2.05% to Rs 879.50 after the company said on Tuesday, 27 November 2007, it had partnered the founder of Aman Resorts for a stake in the luxury hotel chain

Diversified construction firm Jaiprakash Associates soared 4.70% to Rs 1794.75. The company is believed to be in talks with the Aditya Birla group to acquire Bina Power (BPC) in Madhya Pradesh. The company, in a communiqué to BSE, said that as a sequel to exploring new business opportunities the company is examining various proposals including Bina power project in Madhya Pradesh

Engineering firm Punj Lloyd fell 1.82% to Rs 456.15. The company and New York-based private investment firm Global Technology Investment have reportedly bought 33% stake each in Airworks India. Airworks is one of the oldest family-owned aircraft maintenance firms in India. The two investors are putting in close to Rs 100 crore to rejig the Mumbai-based company.

Steel firm Ruchi Strips soared 20% to Rs 24.57 on reports that Japan’s Mitsui & Company has scaled up stake in the Ruchi-group-controlled Indian Steel Corporation to 20% by picking up 10% stake for Rs 65 crore.

Pharmaceuticals firm Ambalal Sarabhai Enterprises was locked at upper limit of 5% at Rs 36.90 after the company sold land admeasuring 28,430.58 square metres to DLF Retail Developers at a consideration of Rs 51.14 crore. The land that it sold constituted only a small part of the total land of the company.

Steel firm Bhushan Steel jumped 5.71% to Rs 1446.30. As per reports, Sanjay Singal, who holds 11% stake in Bhushan Steel, is said to have initiated preliminary talks with the AV Birla group for stake sale. Chairman of the group Brij Bhushan Singal and his younger son Neeraj Singal, the managing director of Bhushan Steel, have opposed any such move, reports suggest.

Electric equipment maker NEPC India was locked at upper limit of 5% at Rs 25.40 after the company said on 27 November 2007 its proposed foray into solar photo voltaic modules and power plant is proceeding on the right track.

Software firm Mindteck (India) gained 4.72% to Rs 54.35 after it said on Tuesday, 27 November 2007, it is acquiring ICI Tech Holdings Inc and its wholly-owned subsidiary.

Anil Dhirubhai Ambani-led Relaince Natural Resources (RNRL) rose 1.92% to Rs 15.45 on huge volumes of 1.89 crore shares on BSE amid speculations that Reliance Industries (RIL) may buyout RNRL as a solution to the seemingly intractable gas dispute between the two Ambani brothers. RNRL, in a communiqué to BSE, said that it is not the policy of the company to comment on speculation and rumours. Developments, if any, which concern stake-holders of the company, will be intimated in due course and at appropriate time, it said.

Software firm Valuemart Info Technologies rose 9.47% to Rs 7.86 after the company said that it has acquired a 74% stake in Datatalk Services (India), a Bangalore based IT & BPO Company for an undisclosed sum.

Cinema chain PVR soared 7.02% to Rs 293.60. Some recent reports suggested that the company plans to invest Rs 300-400 crore to open 250 screens by 2010.

Tyre maker CEAT rose 1.23% to Rs 197.60 ahead of the spin-off of the firm's investment business. Reports suggest that the company's manufacturing and investment business would be separated soon. Each shareholder of the firm would get shares in the investment company.

In Europe, key indices in France, Germany and UK were up by between 0.27% to 0.92%.

Asian stock markets were mostly into the red. Key benchmark indices in South Korea, Japan, Singapore and Taiwan, China, were down by between 0.09% to 1.35%. Hong Kong’s Hang Seng was up 0.59%.

US stocks rose on Tuesday, 27 November 2007, after Abu Dhabi's $7.5 billion purchase of a stake in Citigroup Inc spurred a rebound in financial stocks and a drop in oil prices boosted shares of big manufacturers. The Dow Jones industrial average was up 215 points, or 1.69%, at 12,958.44. The Standard & Poor's 500 Index was up 21.01 points, or 1.49% at 1,428.23. The Nasdaq Composite Index was up 39.81 points, or 1.57%, at 2,580.80.

FII outflow in November 2007, till 26 November 2007, reached Rs 4158.60 crore. FIIs had made heavy purchases in September 2007 and October 2007. FIIs had bought shares worth a net Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007.

The National Stock Exchange (NSE) today, 28 November 2007, said it has decided to add 15 stocks to futures & options (F&O) segment with effect from Friday, 30 November 2007.

BSE on Tuesday, 27 November 2007, announced that it was shifting a total of 414 scrips from trade to trade to normal rolling settlement. The shift will take place effective from Monday 3 December 2007. BSE said these scrips that are being shifted back to normal rolling settlement from trade to trade segment will continue to attract daily circuit filter of 5% or lower as applicable.

In a completed reversal of the trend, the market lost ground in the latter part of the trading in contract to an initial surge. Oil & gas and metal stocks were worst hit. Index heavyweight Reliance Industries (RIL) lost ground. Auto stocks were in demand. The market breadth turned negative from positive in late trade. 23 out of 30 stocks from the Sensex pack were in red.

Asian stocks started the day stronger, tracking gains in US markets, but worries about the credit market soon returned, pushing most of the markets in the red. European markets, which opened after Indian markets, were mixed.

The market has been volatile over the past few days due to alternate bouts of buying and selling amid FII sales caused by redemption pressure in their home countries and fears of a US recession arising from US housing slump and credit crisis.

Prime Minister Manmohan Singh today, 28 November 2007, declared in Parliament that the Indo-US nuclear deal does not bar India from carrying out nuclear tests in future. "If a necessity for carrying out a nuclear test arises in future, there is nothing in the agreement that prevents us from carrying out tests," he said in a brief intervention in Lok Sabha. A discussion is going on today in Parliament on the nuclear deal.

The 30-share BSE Sensex ended down 188.86 points or 0.99% to 18,938.87. The Sensex hit a low of 18,884.20 at the fag end of the trading session. At day's low, the Sensex shed 243.53 points. The Sensex had hit a high of 19,316.76 in early trade. At day's high, the Sensex gained 189.03 points.

The broader based S&P CNX Nifty was down 80.60 points or 1.41% to 5617.55. Nifty had hit a high of 5749.95 earlier during the day. At day's high, Nifty had risen 51.80 points.

The BSE Mid-Cap index ended down 0.12% to 8,383.49. The BSE Small-Cap index ended up 0.03% to 10,375.30. Both these indices outperformed the Sensex.

GAIL India, which distributes natural gas and processes petrochemicals, declined 0.65% to Rs 424.85, off sessions high of Rs 445.90. As per reports, the company has won the rights to market the gas jointly produced by Reliance Industries, British Gas and ONGC from the Panna-Mukta-Tapti fields, which will boost revenues of the company by over Rs 5,00 crore.

Realty major DLF fell 2.05% to Rs 879.50 after the company said on Tuesday, 27 November 2007, it had partnered the founder of Aman Resorts for a stake in the luxury hotel chain

Diversified construction firm Jaiprakash Associates soared 4.70% to Rs 1794.75. The company is believed to be in talks with the Aditya Birla group to acquire Bina Power (BPC) in Madhya Pradesh. The company, in a communiqué to BSE, said that as a sequel to exploring new business opportunities the company is examining various proposals including Bina power project in Madhya Pradesh

Engineering firm Punj Lloyd fell 1.82% to Rs 456.15. The company and New York-based private investment firm Global Technology Investment have reportedly bought 33% stake each in Airworks India. Airworks is one of the oldest family-owned aircraft maintenance firms in India. The two investors are putting in close to Rs 100 crore to rejig the Mumbai-based company.

Steel firm Ruchi Strips soared 20% to Rs 24.57 on reports that Japan’s Mitsui & Company has scaled up stake in the Ruchi-group-controlled Indian Steel Corporation to 20% by picking up 10% stake for Rs 65 crore.

Pharmaceuticals firm Ambalal Sarabhai Enterprises was locked at upper limit of 5% at Rs 36.90 after the company sold land admeasuring 28,430.58 square metres to DLF Retail Developers at a consideration of Rs 51.14 crore. The land that it sold constituted only a small part of the total land of the company.

Steel firm Bhushan Steel jumped 5.71% to Rs 1446.30. As per reports, Sanjay Singal, who holds 11% stake in Bhushan Steel, is said to have initiated preliminary talks with the AV Birla group for stake sale. Chairman of the group Brij Bhushan Singal and his younger son Neeraj Singal, the managing director of Bhushan Steel, have opposed any such move, reports suggest.

Electric equipment maker NEPC India was locked at upper limit of 5% at Rs 25.40 after the company said on 27 November 2007 its proposed foray into solar photo voltaic modules and power plant is proceeding on the right track.

Software firm Mindteck (India) gained 4.72% to Rs 54.35 after it said on Tuesday, 27 November 2007, it is acquiring ICI Tech Holdings Inc and its wholly-owned subsidiary.

Anil Dhirubhai Ambani-led Relaince Natural Resources (RNRL) rose 1.92% to Rs 15.45 on huge volumes of 1.89 crore shares on BSE amid speculations that Reliance Industries (RIL) may buyout RNRL as a solution to the seemingly intractable gas dispute between the two Ambani brothers. RNRL, in a communiqué to BSE, said that it is not the policy of the company to comment on speculation and rumours. Developments, if any, which concern stake-holders of the company, will be intimated in due course and at appropriate time, it said.

Software firm Valuemart Info Technologies rose 9.47% to Rs 7.86 after the company said that it has acquired a 74% stake in Datatalk Services (India), a Bangalore based IT & BPO Company for an undisclosed sum.

Cinema chain PVR soared 7.02% to Rs 293.60. Some recent reports suggested that the company plans to invest Rs 300-400 crore to open 250 screens by 2010.

Tyre maker CEAT rose 1.23% to Rs 197.60 ahead of the spin-off of the firm's investment business. Reports suggest that the company's manufacturing and investment business would be separated soon. Each shareholder of the firm would get shares in the investment company.

In Europe, key indices in France, Germany and UK were up by between 0.27% to 0.92%.

Asian stock markets were mostly into the red. Key benchmark indices in South Korea, Japan, Singapore and Taiwan, China, were down by between 0.09% to 1.35%. Hong Kong’s Hang Seng was up 0.59%.

US stocks rose on Tuesday, 27 November 2007, after Abu Dhabi's $7.5 billion purchase of a stake in Citigroup Inc spurred a rebound in financial stocks and a drop in oil prices boosted shares of big manufacturers. The Dow Jones industrial average was up 215 points, or 1.69%, at 12,958.44. The Standard & Poor's 500 Index was up 21.01 points, or 1.49% at 1,428.23. The Nasdaq Composite Index was up 39.81 points, or 1.57%, at 2,580.80.

FII outflow in November 2007, till 26 November 2007, reached Rs 4158.60 crore. FIIs had made heavy purchases in September 2007 and October 2007. FIIs had bought shares worth a net Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007.

The National Stock Exchange (NSE) today, 28 November 2007, said it has decided to add 15 stocks to futures & options (F&O) segment with effect from Friday, 30 November 2007.

BSE on Tuesday, 27 November 2007, announced that it was shifting a total of 414 scrips from trade to trade to normal rolling settlement. The shift will take place effective from Monday 3 December 2007. BSE said these scrips that are being shifted back to normal rolling settlement from trade to trade segment will continue to attract daily circuit filter of 5% or lower as applicable.

For Q2FY2008, Transport Corporation of India's (TCI) profit after tax (PAT) declined by 26% year on year (yoy) to Rs4.8 crore on account of slack performance at operating level.

The topline grew by a modest 10% yoy to Rs300.4 crore due to a slowdown in the transportation revenues and hiving off of the fuel stations.

Following its performance trend in the previous quarters, the Express (XPS) division and the Supply Chain Division (SCD) division recorded a robust topline growth of 20.7% yoy and 358% yoy to Rs80 crore and Rs37.1 crore respectively.

The margin of the transport division improved marginally by 10 basis points to 2.3% in the quarter. The margins of the XPS and the SCM division witnessed a sharp fall of 110 basis points and 40 basis points to 5.8% and 3.2% respectively. The margin of shipping division reduced drastically by 1,320 basis points to 7% as the company incurred higher expenditure towards the dry-docking of four ships. But on account of higher margin in the wind power division and hiving off of the lower-margin trading division, the overall earnings before interest and tax (EBIT) margin was reduced by 100 basis points to 4.5%. The EBIT grew by 9.6% yoy to Rs13.64 crore.

The interest cost increased by 88% yoy to Rs4.4 crore as the company borrowed debt to finance its capital expenditure (capex). Whereas its depreciation provision increased by 47% yoy to Rs6.9 crore as the company added assets during the year.

The tax provision stood much higher at 39.6%, which led the PAT decline by 26% yoy to Rs4.8 crore.

The company placed Rs53 crore to Fidelity Investments International at Rs105 per share, whereas the next tranche is expected to be placed in the next couple of months. The capex will drive the revenues of the company going ahead.

As the first-half performance of the company was much below our expectations, we are downgrading our profit estimate for FY2008 by 18% to Rs32 crore and that for FY2009 by 3.1% to Rs47.1 crore.

As we know, TCI is transforming itself from a pure play transportation company to an integrated company in the logistics space. The company is incurring a capex of Rs440 crore over FY2007-10 to augment its warehouse capacity, to increase its truck fleet and to buy more ships. Currently the margins of its two new focus businesses—Express and Supply Chain—have not stabilised as the company is in the expansion phase. The courier business is still not profitable and is expected to break-even only in the next fiscal year. Therefore the numbers have been much lower than expected. At the current market price of Rs128, the stock trades at 29x its FY2008 earnings per share (EPS) and 21x its FY2009 EPS. We believe even after factoring the upside from real estate, the current valuations are expensive considering the historical price-earnings ratio (P/E) of the company. Thus taking cognisance of the steep valuations and lower than expected performance of the company, we recommend investors to book profits.

Balaji Motion Pictures Ltd (BMPL) delivered two blockbusters in 2007—Shootout at Lokhandwala and Bhool Bhulaiya. Buoyed by the success of this venture, the management aims to produce and/or distribute at least ten movies a year from FY2009 as against five movies in FY2008.

While Balaji Telefilms Ltd (BTL) is adequately funded for further ramping up BMPL's movie business and though the management has not affirmed news reports of BTL divesting its stake in BMPL, there remains a strong possibility of BTL unlocking value in BMPL.

As expected, with the launch of new channels in Hindi entertainment genre, BTL is scaling up its TV content business. Kahe naa kahe was launched on 9x in November 2007, Kuchh is tara and Kya dil mein hai are to be launched on Sony (from November 26) and 9x (in December 2007) respectively.

We have revised our estimates for FY2008 and FY2009 to factor the new show launches and the management's aggressive plans for ramping up the movie business. Consequently, we are also revising our price target on the stock to Rs427 based on the sum-of-the-parts method and maintain our Buy recommendation on the stock.

U.S. petroleum giant Chevron on Monday acknowledged it was evaluating whether to hold on to its stake in Reliance Petroleum following a sharp run-up in the stock and parent company Reliance Industries' sale of 4% of its holdings in its subsidiary.

Chevron (nyse: CVX - news - people ) bought a 5% stake in Reliance Petroleum — a vehicle set up by Reliance Industries to build a refinery in the western state of Gujarat — for $300 million in April 2006, with an option to increase its stake to 29% by July 2009. The shares have more than tripled to over 200 rupees ($5) since, which could be a deterrent, particularly following Reliance Industries' share sale last week

ITC is looking at increasing its e-choupal footprint to nine more states by adding 20,000 more kiosks and 10 million farmers to its network by 2010.

ITC's e-choupal network currently operates in six states with 6,400 kiosks in 40,000 villages and covers 400,000 farmers. The expanded network will include one lakh villages in 15 states.

The company refused to divulge investment figures for the expansion plans. "Currently, 40-50% of our procurement of certain commodities comes from the choupal network. We are looking at taking it higher," said M Srinivasa Rao, head of new initiatives, ITC.

"We are also looking at expanding our Chaupal Sagar network from 25 outlets at present in three states," he added.

ITC has tied up with 140-odd companies for selling their products at the Chaupal Sagars, Rao said. ITC is scaling up Chaupal Fresh outlets at existing locations including Hyderabad, Pune and Chandigarh.

ITC is mulling entry into cotton and expanding its horticulture products' basket to add to its existing portfolio of soyabean, wheat, coffee and aquaculture.

Following the steep fall in the share price of Reliance Petroleum, what should retail investors do? The surge in the stock last month had many retail investors flocking to the counter, even as experts were crying hoarse that the shares were overvalued. After touching a peak of Rs 295 earlier this month, the stock price has been hurtling downhill.The stock is yet to emerge out of the trading ban in the derivatives segment — it had done so for brief while on Monday — players expect some more volatility at the counter.

Investors should continue to tread cautiously, warn market watchers. “The current confusion regarding the stock’s movement would get cleared by the expiry of derivatives on Thursday and by then RPL is expected to come out of F&O curb,” said PINC Research head-derivatives and strategy Sailav Kaji.

“What is needed to be looked at is whether in the derivatives expiry short positions are rolled over or get covered. In case of short positions getting rolled over, the stock will find support at Rs 180,” he said, adding that long-term investors can still buy the stock at current levels.

Sentiment has been undermined by the promoter, Reliance Industries’, decision to offload 4% stake in Reliance Petroleum through open market trades.

Market watchers said the next key trigger for the stock will be Chevron’s decision on its 5% stake in Reliance Petroleum. Chevron has an option to raise its stake to 29%, but analysts see a low possibility of that happening following RIL’s decision to sell shares in the open market.

”We believe that RPL’s rich valuation and the fact that RIL sold a 4% stake to the market, may imply a possible future Chevron exit unless there is meaningful pullback in the market,” broking house Goldman Sachs said in a note to clients.

Many analysts expect RPL to stabilise around Rs 180 near term. However, Religare Securities president-equities Amitabh Chakraborty said the stock could rally to Rs 215-220 by the end of the December derivative series.“Investors who are right now long on RPL futures should roll over their positions to the December series,”he said.

The 29-million-tonne-per-annum refinery being built by Reliance Petroleum was originally scheduled to commission by December 2008. However, considering the fact that almost 70% overall progress has already been achieved, the management expects to complete the project ahead of schedule. By crunching the original timeline of three years, the company is poised to create a new world record for project implementation in the refining sector.

Indian market is likely to have positive opening as the US market closed in green. On Tuesday, the Indian market fell to closed lower as the cues from global markets are not in favor. The BSE Sensex closed lower by 119.81 points at 19,127.73 and NSE Nifty fell by 33.55 points to close at 5,698.15. We expect that the market will remain range bound during the trading session.

On Tuesday, the US market closed in positive territory. The DJIA closed higher by 215 points at 12,958.44. The Nasdaq and S&P 500 index grew by 39.81 points and 21.01 points at 2,580.80 and 1,428.23 respectively.

Indian ADRs ended in positive. In technology sector, Wipro is trading higher by (2.79%) along with Infosys by (2.56%), Patni computers by (2.28%) and Satyam by (2.07%). In banking sector, HDFC bank and ICICI bank fell (6.82%) and (6.51%) respectively. VSNL and MTNL grew by (8.36%) and (5.36%) respectively.

The major stock markets in Asia are trading on the back foot. Hang Seng is trading lower by 176.35 points at 27,033.86. Japan''s Nikkei dropped by 43.40 points at 15,179.45. Singapore Strait times is trading marginally lower by 4.02 points at 3,368.62. Taiwan weighted slipped by 18.81 points to trade at 8,356.95 and Seoul Composite dropped by 3.05 points to trade at 1,856.74.

The FIIs stood as the net buyer yesterday as the gross equity purchased was Rs.3,325.50 (in crores) and the gross debt purchased was Rs184.60 (in crores). The gross equity sold was Rs2,855.30 (in crores), and the gross debt sold was Rs35 (in crores). The net investment of equity was Rs470.20 (in crores) and the net debt investment was Rs149.60 (in crores).

Today, Nifty has support at 5,653 and resistance at 5,791 and BSE Sensex has support at 18,967 and resistance at 19,539.

US Market erased much of its yesterday’s losses and financial sector took the indices higher today, Tuesday, 27 November, 2007. A major investment by a Abu-Dhabi company in Citigroup was the main reason for investors to cheer today. Market just ignored the mixed economic data. Crude prices slipped by more than $3/barrel. Nine out of ten economic sectors posted gains today, led by a financial shares.

The Dow Jones industrial Average ended the day with a gain of 215 points at 12,958. The Nasdaq Composite Index, finished higher by 40 points at 2,580. S&P 500 finished higher by 21 points at 1,428.

Twenty-six out of thirty Dow stocks ended in green. Citigroup and Intel were the main Dow winners today.

After being hammered bad since the last few weeks, Citigroup lent a good support to Dow today following news that Abu Dhabi Investment Authority (ADIA) will invest $7.5 billion to acquire a 4.9% stake in Citigroup. The investment will make ADIA the bank's largest shareholder.

London based Barclays also announced today that the bank will report FY 07 earnings broadly in line with expectations. This also gave the finance sector another good boost.

But the economic data that came out today were not very encouraging. As per the Conference Board, U.S. consumer confidence index fell to 87.3 from 95.2, well below the 90.2 expected by the market. It was the lowest level and the biggest one-month decline since Hurricane Katrina in the fall of 2005.

Intel soars by more than 3%

Apple and Google together with Intel gave the Technology sector the much needed lift. Apple and Google shares, each rose more than 1% while Intel soared by 3%.

Meanwhile, according to the national Case-Shiller price index released by Standard & Poor's, U.S. home prices fell 4.5% in the year ending in the third quarter. Prices fell 1.7% compared with the second quarter. It's by far the largest price decline in the 20 years covered by the index.

Most of the Indian ADRs ended in green today. VSNL was the main winner soaring by more than 8%. It was followed by HDFC Bank and ICICI Bank, gaining 6.8% and 6.5% respectively.

Crude oil drops to lowest level in a week

Crude oil price was at its lowest level in a week after traders speculated that Gulf members of Organization of Petroleum Exporting Countries (OPEC) are in serious discussions about boosting output by upwards of 750,000 barrels a day when they meet on 5 December in Abu Dhabi. Price also slipped after Saudi Arabia's oil minister said the country increased production to the highest this year.

Crude-oil futures for light sweet crude for January delivery closed at $94.4/barrel (lower by $3.3/barrel or 3.4%) on the New York Mercantile Exchange. Prices fell to $94.2/barrel during intraday trading. Prices are up 56% from a year ago.

Tomorrow, investors will look for new economic data, along with a host of earnings reports, to help set the tone of trading. Durable Orders report will be released before market opens followed by Existing Home Sales for October. Also garnering attention, will be the Energy Dept.'s weekly inventories report and Federal Reserve’s Beige Book report.

The near term trend on the domestic bourses will be determined by the extent of rollover in the derivatives segment. At end of Tuesday (27 November 2007)’s trade, about 51% of open positions in Nifty futures were rolled over to December 2007 contracts from November 2007 contracts. November 2007 derivatives contracts expire on Thursday, 29 November 2007. Overall rollover in the futures & options segment was, however, low at 42% to 45%, till Tuesday.

Asian stock markets were mixed on Wednesday, 28 November 2007, with a confidence-boosting $7.5 billion capital injection for Citigroup offset by a fall in resource shares as commodity prices slid. On Tuesday, Abu Dhabi Investment Authority said it was buying a 4.9% stake in Citigroup, which is wrestling with the fallout from the US subprime mortgage crisis.

Key benchmark indices in Hong Kong, Japan, and Taiwan were down by between 0.24% to 0.69%. Key benchmark indices in China, South Korea and Singapore were up by between 0.07% to 0.48%.

US stocks rose on Tuesday, 27 November 2007, after Abu Dhabi's $7.5 billion purchase of a stake in Citigroup Inc spurred a rebound in financial stocks and a drop in oil prices boosted shares of big manufacturers. The Dow Jones industrial average was up 215 points, or 1.69%, at 12,958.44. The Standard & Poor's 500 Index was up 21.01 points, or 1.49% at 1,428.23. The Nasdaq Composite Index was up 39.81 points, or 1.57%, at 2,580.80.

Oil steadied after falling more than 3% on Tuesday, 27 November 2007, on expectations that OPEC will boost supply and amid concerns that US economic problems will crimp demand growth. US crude was trading at about $94.60 a barrel, well off the recent peak of $99.29.

Foreign institutional investors (FIIs) were net sellers to the tune of Rs 465 crore in the futures & options segment on Tuesday, 27 November 2007. According to data released by the NSE, FIIs were net sellers of index futures to the tune of Rs 11.84 crore and bought index options worth Rs 75.36 crore. They were net sellers of stock futures to the tune of Rs 529.05 crore and bought stock options worth Rs 0.54 crore.

The market has been volatile over the past few days due to alternate bouts of buying and selling amid FII sales caused by redemption pressure in their home countries and fears of a US recession arising from housing slump and credit crisis.

FII outflow in November 2007, till 26 November 2007, reached Rs 4158.60 crore. FIIs had made heavy purchases in September 2007 and October 2007. FIIs had bought shares worth a net Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007.

Not the cry, but the flight of the wild duck leads the flock to fly and follow.

After the cry, the bulls will look for a wild duck to follow. But the topsy-turvy ride on the bourses is likely to continue, particularly with the F&O expiry tomorrow and continuing uncertainty over the sub-prime meltdown in the US. Wall Street rebound after Monday's big fall failed to cheer Asian markets which have chosen not to get carried away by the advance in US stocks. European markets finished marginally in the red. We expect a cautious-to-higher opening followed by a volatile day of trade as market players consider their options before the derivative settlement.

In the meantime, the Parliament will debate the Indo-US nuclear deal, though there won't be any voting after that. The Government is in minority on this issue, and will hence find it tough to win over the MPs. As always, Reliance shares will remain in the limelight. RIL and RNRL will be in action amid a report in a financial daily that both the camps have buried the hatchet over the gas supply controversy. One of the options is that RIL could take over RNRL. RPL will also remain in the spotlight, though it remains in the F&O curbs. Of course, there is more to the Indian market than just Reliance. Expect lots of stock centric action and wild swings.

High risk investors could look at SREI Infra, Dish TV, Bag Films, Ganesh Forgings, Bombay Rayon and Radha Madhav for a period of 6-12 months.

RSWM has approved the Scheme of Arrangement for de-merger of its strategic investment division into Bhilwara Technical Textiles Ltd. Its Board has also approved the exchange ratio of 10 shares of Re1 each in Bhilwara Technical Textiles for every 4 shares of Rs10 each held in the company.

IT People India has approved the merger of Marketplace Technologies Pvt. Ltd (MTP) and Orient Information Technology Ltd. (OITL), into the company.

US stocks rallied on Tuesday after Citigroup received a $7.5bn cash infusion and JPMorgan said Intel will benefit from robust computer demand. Citigroup's advance helped stocks rebound from Monday's carnage that brought the decline from October to 10%, the first so-called correction in four years.

Intel led semiconductor makers to their biggest gain in two weeks. Altria Group rose after Goldman Sachs advised buying companies whose profits are not linked to the US economy.

Market breadth was positive. About five shares rose for every two that fell on the New York Stock Exchange. Gains were broad based, with 28 out of 30 Dow stocks rising. Citigroup shares slipped despite the encouraging news. But other big financial stocks rose.

Concerns about the threat of recession remain and US stocks are bound to remain choppy in the weeks ahead of the Dec. 11 Fed meeting.

Traders are betting that the central bank will cut the fed funds rate by at least a quarter percentage point, but many on Wall Street are hoping for a bigger cut. There is also the possibility of no Fed rate cut.

After the close, Freddie Mac said it was cutting its quarterly dividend in half and that it was issuing $6bn in stock in anticipation of more losses ahead. Freddie shares fell 1.8% in extended-hours trading.

US light crude oil for January delivery fell $3.28 to settle at $94.22 a barrel on the New York Mercantile Exchange amid growing bets that OPEC ministers will agree to raise crude production when they meet in early December.

US stocks briefly stumbled after the release of the November Consumer Confidence report, which was weaker than expected.

Treasury prices tumbled as investors took profits after Monday's big rally, pushing the corresponding yields higher. That advance had pushed down the yield on the benchmark 10-year note to 3.83% - the lowest level since June 2005.

In currency trading, the dollar gained versus the euro and yen. COMEX gold for December delivery tumbled $12.50 to settle at $814 an ounce, falling along with other dollar-traded commodities.

Most regional markets in Europe also closed lower. The pan-European Dow Jones Stoxx 600 index ended with a loss of 0.4% at 354.27. The UK's FTSE 100 shed 0.6% to 6,140.70, while the German DAX 30 fell 0.5% to 7,531.35 and the French CAC-40 declined 0.4% to 5,434.17.

Latin American stocks closed higher. In Brazil, the main Sao Paulo stocks index rose 0.6% to 59,431. In Mexico, the IPC index of the 35 most-traded issues rose 0.9%, or 241.64 points, to close at 28124.65.

Asian markets were mixed this morning despite the overnight rally on Wall Street. The Nikkei in Tokyo was down 43 points at 15,179 and the Hang Seng in Hong Kong dropped 27 points to 27,182. The Kospi in Seoul and the Straits Times in Singapore were almost flat at 1855 and 3368, respectively.

Meanwhile, the yen rose against all of the world's 16 most-actively traded currencies on speculation that Japanese exporters purchased it to pay bills due at the end of the month. The yen also rebounded against the dollar, after declining 1.5% yesterday, on speculation that a Fed survey will highlight a regional slowdown in the world's biggest economy.

Volatility to prevail!

Markets ended in negative terrain after two consecutive days of gains on back of weak cues from the International markets. After opening with a negative gap benchmark Sensex rebounded and hit a high of 19,211. Thereafter the key indices traded in a range throughout the session. Finally, 30-share Sensex slipped 119 points to close at 19,127 and Nifty closed 33 points lower at 5,698

Among the 30-scrips of Sensex, RIL, ICICI Bank, Bharti Airtel and Reliance Energy were among the major laggards, While, BHEL, SBI, Bajaj Auto and TCS were among the major gainers.

Mundra Port India’s largest private port; surged on its debut, the scrip more than doubled at open. The scrip finally closed at Rs959 translating a premium of 117%. The company had come out with an issue of 4.02 crore shares and the issue price of the shares was fixed at Rs440.

The company primarily deals in providing bulk cargo services, container cargo, crude oil cargo and value-added port services. MPSEZL is the developer and operator of Mundra port located in Kutch district of Gujarat and is currently developing a multi product SEZ. The scrip touched an intra-day high of Rs1050 and a low of Rs770 and recorded volumes of over 2,00,00,000 shares on NSE.

RPL further dropped by over 3% to Rs198. According to reports Chevron Corp. may sell its 5% stake in the company to its parent Reliance Industries Ltd. The scrip touched an intra-day high of Rs205 and a low of Rs194 and recorded volumes of over 2,00,00,000 shares on NSE.

JSW Steel advanced 1% to Rs990 after reports stated that the company’s unit, JSW Energy Ltd., plans to raise up to Rs50bn through an initial share sale by April 2008 to fund expansion plans. The scrip touched an intra-day high of Rs1031 and a low of Rs979 and recorded volumes of over 14,00,000 shares on NSE.

Tata Steel ended on a flat note at Rs853. Reports stated that the company may pick up 35% stake in its newly formed Mozambique JV for a consideration of Australian $100mn, subject to regulatory approvals. The scrip touched an intra-day high of Rs862 and a low of Rs841 and recorded volumes of over 15,00,000 shares on NSE.

IVRCL Infra gained 0.5% to Rs478 after the company announced that they received orders worth Rs3.3bn from Pune and Chennai regions. The scrip touched an intra-day high of Rs484 and a low of Rs471 and recorded volumes of over 6,00,000 shares on NSE.

IFCI was trading higher by 2.7% to Rs90 following reports that the board of Directors of the company would have to consider Rs9.2bn debt given by the Union Government while finalizing how much of debt it owes to banks will be converted to equity. The scrip touched an intra-day high of Rs93 and a low of Rs85 and recorded volumes of over 3,00,00,000 shares on NSE.

Asian Hotels gained 2% to Rs639 after reports stated that the company plans to start Power Generation Biz. The scrip touched an intra-day high of Rs650 and a low of Rs580 and recorded volumes of over 2,000 shares on NSE.

Gail gained 1.1% to Rs427 after the company won right to market gas from Panna-Mukta-Tapti reports stated. The scrip touched an intra-day high of Rs430 and a low of Rs417 and recorded volumes of over 17,00,000 shares on NSE.

RCom edged lower by 0.6% to Rs684. Reports stated that the company would tie up with US based glasshouse for managed IT services and also would Rcom has forayed into remote network management according to reports. The scrip touched an intra-day high of Rs690 and a low of Rs680 and recorded volumes of over 18,00,000 shares on NSE.

What the FIIs are doing

FIIs were net sellers of Rs4.98bn (provisional) in the cash segment on Tuesday while the local institutions pumped in Rs2.98bn.

In the F&O segment, foreign funds were net sellers to the tune of Rs4.65bn yesterday.

On Monday, FIIs were net buyers of Rs4.7bn.

Stocks in News:

REL plans to arrange coal for its upcoming power plants through buyouts, acquisition of equity and assured supply contracts.

The market is likely to witness volatility as US market ended on positive side and major Asian gauges like the Nikkei and the Hang Seng index are moving in negative territory in current trades and expected to rise in early trades. The unwinding of positions in derivative segment ahead of expiry of November series may also keep the domestic indices volatile. However, FIIs remained net buyers in equities for last couple of sessions may help the sentiment to turn positive. Among the indices, the Nifty could test higher levels around the 5900, while on the downside it has a key support at 5394. The Sensex has a likely support at 18800 and may face resistance at 19500.

US indices rose on Tuesday, as investors welcomed the Citigroup's fresh infusion of cash and Barclays' outlook. While the Dow Jones gained 215 points at 112958, the Nasdaq was added 40 points at 2581.

Indian floats also ended higher. VSNL rose 8.36% while HDFC Bank, MTNL, ICICI Bank, Rediff, Patni Computer and Tata Motors gained over 2-6% each. Dr Reddy's, however, was the only loser amongst the ADRs and declined by 0.71%.

Global crude oil prices slipped marginally, with the Nymex light crude oil for January series fell by $3.28 to close at $94.42 per barrel. In the commodity space, the Comex gold for December delivery tumbled $12.50 to settle at $814 an ounce.

Crude oil price was at its lowest level in a week after traders speculated that Gulf members of Organization of Petroleum Exporting Countries (OPEC) are in serious discussions about boosting output by upwards of 750,000 barrels a day when they meet on 5 December in Abu Dhabi. Price also slipped after Saudi Arabia's oil minister said the country increased production to the highest this year.

For the day ending Tuesday, 27 November, 2007, crude-oil futures for light sweet crude for January delivery closed at $94.4/barrel (lower by $3.3/barrel or 3.4%) on the New York Mercantile Exchange. Prices fell to $94.2/barrel during intraday trading. Prices are up 56% from a year ago.

Traders speculated today that the 12 members of the OPEC will probably increase output 1.1% to 31.6 million barrels a day this month. Also, as per reports, Saudi Arabia, the biggest producer in the OPEC, is pumping 9 million barrels a day, the most in more than a year.

Last week, prices rose to $98.62/barrel during intra day trading on 7 November, 2007. Oil prices had rose 16% in October, 2007, the biggest one-month gain since September 2004.

All heating products plunge with crude

Natural gas declined in New York on expectations stockpiles may have fallen less than normal for this time of year because of warmer weather. Gas for December delivery fell 17.9 cents (2.3%) to $7.544 per million British thermal units.

Against this backdrop, December reformulated gasoline dropped 6.84 cents at $2.3730 a gallon and December heating oil fell 5.32 cents at $2.6534 a gallon.

In the currency market today, the dollar ignored downbeat data on U.S. home prices and firmed modestly against most major currencies. News that Abu Dhabi will make a $7.5 billion investment in Citigroup also led dollar gain against euro. The dollar index, which tracks the performance of the dollar against a basket of major currencies, rose 0.3% at 75.115.

Attacks on oil facilities in Middle East and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.

At the MCX, crude oil for December delivery closed lower at Rs 3758/barrel, lower by Rs 111 (2.9%) against previous day’s close. Natural gas closed at Rs 312.3/mmtbu as against previous close of Rs 320.1/mmtbu, lower by Rs 7.8/ mmtbu.

India’s stock market regulator is probing the movement of Reliance Petroleum Ltd’s (RPL) share over the past few weeks. The share rose by 76% between 22 October and 1 November when it touched a high of Rs295 in intra-day trading on the Bombay Stock Exchange (BSE), and fell by 18% between 5 November and 6 November after the National Stock Exchange (NSE) barred derivatives traders from taking fresh positions in RPL futures.A senior official of the Securities and Exchange Board of India (Sebi), who did not wish to be named, confirmed that the capital market regulator has called for trading data from stock exchanges and is “looking into the matter”. “I can’t share with you any information at this point as this is confidential,” the official added. He said Sebi routinely looks into stocks that show unusual movements.

It is the stock market regulator’s job to investigate sharp and sudden movement in share prices, but such investigations, by themselves, do not imply any wrongdoing.

RPL’s stock fell 2.96% on Tuesday on BSE to close at Rs198 even as the exchange’s benchmark index Sensex fell 0.6% to close at 19,127.73.Between 1 November and 6 November, substantial positions were built in RPL futures on NSE, as a result of which the prescribed marketwide position limit was breached.A futures contract is an exchange-traded one requiring the delivery of shares at a specified price on a specified future date.

The marketwide position limit is defined as 20% of a company’s free-float capital, or shares available for trading.

In RPL’s case, the marketwide position limit was 180 million shares. Over four trading sessions between 1 November and 6 November, the open interest in the RPL futures more than doubled from 86 million shares to 171 million shares.This was accompanied by a drop of 25.3% in RPL’s share price from its intra-day high of Rs295 on 1 November, the day open interest started building up significantly, to Rs220.35 on 6 November.

Normally, a drop in share price accompanied by a build-up in open interest suggests that traders are taking fresh short positions.

People taking a short position are essentially taking a negative view on the stock. For instance, a person who went short on a certain company when its shares were trading at Rs290 can wait till the settlement date, say 29 November, when its price is down to Rs190, and then buy the shares (since he has already sold it at Rs290, he makes a profit of Rs100 a share). Or, this person can wait for the share price to start going down and buy back an equivalent amount of shares as he has sold, squaring his position.

Open interest is the outstanding position traders have in the futures and options market. Most of the outstanding position in RPL futures were in the near-month series—the futures contract set to expire this Thursday, 29 November.

On 6 November, nearly 95% of the total futures positions were in the near-month series, which essentially means that a large number of people (or, more accurately, a large number of positions) were betting on the price of the stock to fall, just like it did.It is this phenomenon that Sebi is investigating because the large number of positions would suggest that there were too many bets being placed that the RPL stock would fall.

In a press release issued late on 26 November, RIL said it had sold 180.4 million shares, or 4%, in RPL, bringing down its holding to 70.99%.The sale raised Rs4,023 crore, at a price of Rs223 a share.